The Research Of The Relationship Between Rural Financial Development And Rural Economic Growth

As a traditional agricultural country, peasants accounted for 70% of total population of China, so stable and healthy development of the rural economy is very impartment for China's socialist economic construction. How to build a sound rural financial system, and improve the efficiency of rural finance in order to better support for rural economic development, has become a key whether China's rural economy can maintain long-term stable development.This paper is based on the classical theories of agricultural development, and analyzes the existing problems in the rural financial development during our rural financial system reform. On this basis, this paper used econometric methods to analysis the relationship between rural financial development and economic growth, we introduced appropriate indicators of financial development variables and economic growth variables into the production function to establish an empirical model, made Johansen cointegration test of these variables based on VAR model, and then test the causation relation between rural financial development and economic growth by using Granger causality test.The empirical results show that there is a long-term equilibrium relationship between rural financial development and economic growth. Rural financial development is conducive to rural economic growth, but otherwise the growth of the rural economy can not better promote rural financial development, the rural financial development has lagged behind rural economic growth. Finally, this paper proposed several countermeasures to solve the main problems of financial development in the rural areas on the aspects of the construction of rural financial institutions, optimization of rural financial structure, supervision of rural finance and the establishment of agricultural insurance system.